That is a graft union.....most magnolias are grafted. Any branches at that point would be coming from the understock and their removal is completely typical.

Your tree should be fine, provided the rest of the rootball looks normal (and since it is still wrapped in burlap, we can't tell).

fine???

remove the pot.. remove the burlap .. and remove the orange twine ... and plant it properly ... if you dont.. your tree will not be fine ...

and never leave the burlap exposed above grade like the dude who potted it did.. it will literally wick water out form the root zone.. making proper watering very hard ...

if the tree is dormant.. and leafless.. i would probably bare root it.. and plant it properly in native soil ....

ken

https://sites.google.com/site/tnarboretum/Home/planting-a-tree-or-shrub